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April 26, 2010

After the past year of watching option after option expire worthless while soybean oil basically traded dead sideways, I am about ready to be carried out on a stretcher, but NOW, more than ever, I do believe something  big IS about to happen…

The following excerpt was copied from my “trading philosophy” on the website…I know I’ve presented these quotes before, but I will do so once again as these three thoughts EXACTLY (and I mean “exactly”) describe the situation in Soybean Oil today.

From: A Basic Philosophy & The Both Sides Strategy

Select markets which have done nothing for a long time.   If a market has been trading sideways for quite some time, probabilities "should be" (anything is possible in the futures markets) better it is soon going to move somewhere. Long sideways move are often followed by large directional moves.

Or select markets at price levels at which you can make the statement, " It will not stay here, and, in  fact, should move a long way from here, one way or the other".  As an example, you might look at a market making the same high for the fifth or six time in six months and say, "I don't know which way it's going, but it's not going to be right here six months from now". Obviously, it could be, but, again, probabilities "should" favor it moving away from this old high, and this move could be either substantially up, or down.

When you find something you like, put your money on it, but buy some options going opposite your opinion. This goes against everything you will feel. You think you are right or you wouldn't be making the trade. Most of the time, my recommendations are in units of two calls to every put for bullish opinions, or two puts to every call for bearish opinions.

No approach works all the time, but when I wrote those thoughts for our fledgling website, I was trying to outline my concept of the most “perfect” trade I could ever look for, which when combined with the “Both Sides Strategy”, would give me what I considered to be the highest probability of either making money, or avoiding the loss of money, in the futures markets.…Check out the following chart and decide for yourself if the Soybean Oil (be damned!) market does, or does not, identically fit the “perfect” situation as I described it over 15 years ago.


 No Question…This trade has been “all pain and no gain” and the “Both Sides Strategy”, or “2 & 1”, has saved a few bucks at times, but essentially the sideways action has been murder on everybody who has followed me on this…Even so, this does not negate the fact (in my mind anyway) that this trade, from HERE, has what I would call gigantic profit  potential, or, the very strong possibility of being able to recover 100% of whatever money you put on the table. Yes, I have said all of this SO many times during the past 12-18 months, but sometimes this business does require more intestinal and financial fortitude than any of us ever would imagine…And if you ever intend to put another dime on the table as a futures trader, as sick as you (and I) are of this market, what you are supposed to do, right now, is write the check one more time…while it’s here…while it’s in the “ideal” position.


 Here’s the basic 2 & 1…


Here’s a little more leverage…


Give me a call if you are interested…




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